U.S. Unemployment Down, But Job Growth Stagnates
After relatively modest job growth of 174,000 for April, May brought a serious nosedive. With total growth dipping to a mere 138,000 jobs added for May, the slowdown equates to a 20 percent speed bump. That said, unemployment also dropped by 0.1 percent to 4.3 percent, the lowest level recorded since 2001.
Source: U.S. Bureau of Labor Statistics Databases, Tables & Calculators — Unemployment Rate 2000-2017
The last time U.S. unemployment dropped below 4 percent was in December 2000. That's a range of values that occurs in only that one year (2000) over the entire period from 1976 to the present day! At the same time, labor force participation is also dropping, currently at 62.7 percent for May.
Wages are up slightly, up by 4 cents per hour to an average hourly wage of $26.22, and up 63 cents over the past 12-month period. And indeed, with unemployment at a near-historic low, wages are bound to rise. That's because this level of employment means that everyone who wants a job already has one — so employers need to pay more to induce people already working to move into new positions.
I'm a little troubled about the recent trend in job growth, however. Our fearless leader's promises of faster job growth notwithstanding, the past three months have shown something of a stall in that rate. The current jobs report, in fact, revises April numbers down from 211,000 to 174,000 jobs added for that month.
The tally from March also dropped off, from 79,000 to 50,000 jobs. That puts average monthly job growth over the past quarter (March through May) at only 121,000 jobs, down by more than 50,000 jobs monthly from the same growth rate of 186,000 jobs/month over the one-year period from May 2016 through April 2017. That trend is heading in the wrong direction!
A closer look at where growth is occurring, jobs-wise, shows the following upticks:
? Professional and business services was the big gainer for May, with 38,000 jobs added that month. This is, however, down from the average monthly gain over the past twelve months of around 46,000 jobs per month (though the YTD average for 2017 remains in line with that number).
? Food services and drinking establishments also continue to grow, at 30,000 jobs for May. Over the last 12 months, this sector has added 267,000 jobs, so this month's figures actually beat the average over that period.
? Health care gained 24,000 jobs in May, with ambulatory health care jobs bumping up by 13,000, and hospital jobs up by 7,000. Healthcare job growth is slowing, though: That figure has averaged 22,000 jobs monthly in 2017, versus 32,000 monthly in 2016.
? Mining jobs continue their recent, post-election upswing, with 7,000 jobs added for May. Since last October, this sector has added 47,000 jobs, for something under 8,000 jobs per month.
Otherwise, employment growth by sector has changed very little, which means that construction, manufacturing, wholesale and retails trades, transportation and warehousing, information, financial activities, and government are all flat, mostly unchanged when compared to April.
A closer look at our home sector, Information, shows the end of longstanding month-over-month shrinkage in that sector's size. Comparing the number of unemployed persons for May 2016 (134,000) to May 2017 (123,000) versus the corresponding unemployment rates of 5.2 percent and 4.7 percent, respectively, we get some welcome and unexpected news:
The information sector is finally showing some growth! In fact, these latest numbers show an increase from 2.58 million in May 2016 to 2.62 million for May 2017, for a net jump of around 40,000 jobs. I take this as a sign of encouragement for at least two reasons.
First, this is the first jump in sector size I've calculated in three years or more. Second, growth in Information often heralds general growth in the overall economy. That's because IT is widely regarded as an engine for business growth of all kinds. Of course, we'll have to wait to see if this trend continues or to learn that it's just a momentary blip.
Overall, this latest jobs report is a truly mixed bag. There are some definite rays of sunshine, as unemployment nears historic lows, wages rise a bit, and information takes a jump upward. But with the overall trend strongly favoring slowing growth in jobs added, it's hard to be bullish about strong economic growth for 2017.
As I heard an economist say this morning on NPR, "President Trump's promise of 3 percent economic growth for 2017 is going to be hard to achieve." Truer words were never spoken! It does, however, promise to be an interesting ride. Buckle up and keep your eyes on the road, please.